SAN DIEGO — Food supplies are shrinking. Diseases are mutating.
Global warming and high gas and oil prices are making alternative energy a must.
Critics still have plenty of problems with genetically engineered foods and bio-based medicines and fuels, but worldwide woes are giving the biotech business an unexpectedly big boost.
“It’s a great time to be in this space,” said Patrick Kelly, a vice president of the Biotechnology Industry Organization trade group.
Biotech-industry revenues hit an all-time high last year, according to consulting firm Ernst & Young, as did venture-capital investments in biotech companies.
The value of mergers and acquisitions in the business hit a new high too — nearly $60 billion in the United States — as big pharmaceutical companies faced with a record number of expiring patents on their medicines bought up lots of little biotech companies.
But is the recent rise in biotech just a precursor to a fall? Even though it is bringing in record revenues, the biotech industry overall has still yet to make a profit.
Last year, the global biotech business lost $2.7 billion, according to Ernst & Young. In the United States, biotech companies lost nearly $300 million — their best year yet.
Wall Street may be growing tired of the losses. While stocks of large biotech companies have generally held their value, small andmidsize biotech stock indexes have dropped as much as 16 percent this year, according to Burrill & Co., a biotech venture capital firm. Pricings for initial public offerings are down 70 percent from a year ago, prompting many biotech companies to shelve their plans to go public.
“This is a tough, tough business,” said Brian Adams, director of business development for Atlanta-based drugmaker Sciele Pharma Inc. “It costs a lot of money, time, effort and luck to come up with that blockbuster.”
Meanwhile, some recent high-profile failures — most notably of anti-inflammatory drug Vioxx, which had to be pulled from the market — are resulting in tougher regulations and scrutiny of biotech drugs.
They’re also helping fuel critics’ claims that bio-based products need more study before they’re released. Among the most controversial right now: genetically altered foods designed to produce stronger crops and bigger yields that could help address food shortages worldwide.
“We don’t know the health effects, we don’t know the environmental effects, and we don’t know if some farmer is going to get sued in the future because (a biotech company) has a patent on the corn,” said Kathy Jo Wetter, a researcher at ETC Group inCarrboro, N.C., which monitors the biotech industry.
ETC is lobbying world organizations and governments for more study into biofoods and biofuels, but industry officials say there’s already plenty of regulation and scrutiny of the biotech business.
